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To Curb Inflation… We Must Avoid the Mistakes of the Past

To Curb Inflation… We Must Avoid the Mistakes of the Past

Thursday, 30 June, 2022 - 11:00
Salman Al-Dossary
Salman Al-Dossary is the former editor-in-chief of Asharq Al-Awsat newspaper.

There are things in life that are fated to be governed by facts and figures, with sentiment playing no role at all. Some of these facts and figures may be painful, but to dress them up is to fabricate them, and doing so would harm the party concerned before anyone else.


One of the most essential domains governed by facts and figures is the economy, in which hopes and dreams have no place.


The most prominent economic issue of the day, in my view, is inflation. Inflation is ravaging the globe as price hikes hit people’s temperaments before their pockets. People are right to complain. None of us is happy to pay more than we had in the past, whatever the reasons.


Prices are not rising haphazardly; an array of developments have pushed them up. One major factor is the shutdowns imposed by the COVID-19 pandemic, which disrupted global supply chains, and its economic implications were exacerbated by the obstruction of the Suez Canal at the time, as it led to a shortage of containers and an increase in freight prices.


On top of that, we have the newer shutdowns imposed in some parts of the world. Those imposed recently in China, for example, applied a lot of pressure on the global economy. The Russian-Ukrainian crisis is another one of many factors that have had significant ramifications on global inflation.


On the bright side of things, inflation rates in Saudi Arabia could be considered among the lowest globally, if not the absolute lowest. At a mere 2.3 percent, it outdoes the United Kingdom’s 9 percent, Canada’s 6.8 percent, Singapore’s 5.4 percent, and New Zealand’s 5.9 percent. These figures tell the story, not what we want to hear.


Seeking solutions, the International Monetary Fund called for solving the problems plaguing the labor market by lifting the pandemic restrictions and incentivizing businesses to raise wages while working to address supply chain issues. It also stressed the need for central banks to take measures to combat inflation.


These measures were recommended because of a firm conviction that inflation is a massive problem that no country cannot resolve alone and that requires inclusive collective solutions.


The reasons for today’s inflation and the IMF’s recommendations for overcoming it demonstrate that the problem is global.


Despite its global scope, Saudi officials were quick and proactive in their response, which allowed them to achieve the desired results, containing inflation far more than other countries managed to. If they hadn’t raised gasoline’s price caps when they did, prices would have spiked along with global energy prices today.


As an observer interested in the media, I am unsettled by opinions expressed to stir people’s sentiments by pushing rumors and spreading false information about prices. I reached two important conclusions from my personal monitoring efforts.


First, actual price-rise figures are far lower than the inflation rates that have been circulating... These numbers intended to confuse public opinion are meticulously fabricated, and they are often spread by victims who believe they are factual without verifying them.


Second, as we have learned from previous crises, we must keep in mind that this phase - while it may be difficult - is nonetheless temporary... At the same time, states cannot contain the global price hikes, with all the economic complications that come with it, while catering to the market and supply and demand.


Going back to the recent past, we find the state faced with unprecedented challenges as oil prices fell before for all to see, an experience it learned from to overcome the decline in prices during the pandemic through the economic reforms of Saudi Vision 2030... which demand that we deal with the current circumstances very prudently.


Avoiding over-excitement about the rise in oil prices and non-oil revenues is crucial for working towards a more sustainable future for forthcoming generations.


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